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RBS chairman ready to resign from Banco Santander in Spain

News date: Tuesday, 12th of October, 2004

Sir George Mathewson, chairman of Royal Bank of Scotland, is understood
to be ready to resign as a non-executive director of Banco Santander
Central Hispano to facilitate the Spanish bank's planned £8bn takeover
of Abbey National.

An announcement on his intentions is expected
shortly, along with confirmation that the two Santander bankers who are
non-executives on the RBS boards are also ready to leave if their Abbey
deal is successful.

Emilio Botin, chairman of
Santander, and Juan Inciarte, Santander's general manager, are
long-standing members of the RBS board. Mr Botin has been a
non-executive since 1989 while Mr Inciarte was appointed in 1998. They
have their positions because Santander owns about 5% of RBS.

Similarly, Sir George's position on the Santander board is the result of RBS's stake in the Spanish bank.

The
executives are understood to be keen not to be seen to stand in the way
of the Abbey deal, which is currently being scrutinised by Mario Monte,
the EU's competition commissioner.

The EU is
scheduled to make its pronouncement on the deal on September 17.
Santander has made it clear it expects the announcement from the EU on
or before this date. Under the terms of EU mergers investigation,
Santander has until September 10 to make any undertakings required by
the EU to receive clearance for the deal.

Questions
about the continued role of Sir George on the Santander board and the
two Spanish executives on the RBS board have been raised ever since the
Spanish announced the deal to takeover Abbey in July. When asked at the
RBS interim results last month of his intentions, Sir George would only
say: "We'll cross that bridge when we come to it." At the time, he also
admitted that he had not attended the Santander board meeting at which
the Abbey bid was ratified.

Capital One Savings

NatWest E-Savings Account

The
offer from Santander has been recommended by the Abbey board, but there
is a possibility that HBOS could make a counter offer. The Halifax Bank
of Scotland combine has admitted it is considering a possible approach,
but its board has not yet met to decide whether to proceed with a bid
that would very likely lead to a lengthy investigation by the UK's
competition commission.

Abbey's share price
rose 0.5p yesterday to 612p, above the 598p at which the Santander
offer currently values Abbey. The deal is constructed so that Abbey
investors receive one Santander for their existing Abbey shares and 31p
in cash.

Santander is yet to send the lengthy
offer document to Abbey's shareholders, some 1.7m of whom are private
individuals who hold their investment as a result of Abbey's conversion
from a building society 15 years ago.

HBOS has
complained to the EU about the cross directorships between Santander
and RBS and the cross-holdings they have in each other.

Neither RBS or Santander would comment on their boardroom structure last night.